2014 Global Green MBA Issue

The virtuous cycle of co-ops

Survey finds that the cooperative business model is helping the global community meet its sustainability goals.

Illustration by Dave Murray

While the debate around the UN’s Sustainable Development Goals beyond 2015 is intensifying, the International Labour Organization (ILO) has been actively promoting the cooperative model as an important instrument to promote sustainable development. We firmly believe at the ILO that the values and principles governing cooperative enterprises respond to the pressing issues of economic development, environmental protection and social equity in a globalized world.

Last year, the ILO’s Cooperative Unit, or COOP, launched a survey within the international cooperative movement to find out how the co-op business model is contributing towards sustainable development, how the actors in the co-op movement perceive the debate around the post-2015 development agenda, and which role co-ops should play. The findings from the survey show how cooperatives made a difference in achieving sustainable development goals with concrete actions and engagement at the local level.

A policy brief of the report shows that cooperatives are often present where private or state service providers are unable or unwilling to go. Cooperatives thus play a key role in health and social care, access to financial services, as well as water and energy provision in rural areas in many countries.

They also support more inclusive and equal trade relations and value chains through their engagement in alternative forms of trade, such as fair trade, and contribute to a low-carbon economy through innovative approaches.

How do co-ops support sustainable development goals? First, cooperatives can play a key role in poverty reduction. While savings and credit cooperatives facilitate their members’ access to financial capital, agricultural cooperatives help farmers access the inputs required to grow crops and keep livestock and help them process, transport and market their products.

In Ethiopia, 800,000 people in the agricultural sector are estimated to generate most of their income through cooperatives. In Egypt, four million farmers derive income from selling farm produce through agricultural marketing cooperatives.

Second, cooperatives are major job providers. They employ at least 100 million people worldwide. It has been estimated that the livelihoods of nearly half the world’s population are secured by cooperative enterprises. The world’s 300 largest cooperative enterprises have collective revenues of $1.6 trillion (U.S.), which is comparable to the gross domestic product of Spain.

Cooperatives’ impact employment on different levels: they employ people directly, and they promote employment indirectly through creating market opportunities and improving market conditions. They even influence those who are not members of cooperatives but whose professional activities are closely related to transactions with cooperatives.

Recent evidence also shows that jobs in employee-owned enterprises are less likely to be negatively affected by cyclical downturns and that these enterprises had greater levels of employment stability over the recent economic downturn.

Third, cooperatives are contributing toward gender equality by expanding women’s opportunities to participate in local economies. For instance, 49 per cent of members of the Spanish Confederation of Workers Cooperatives are women, while 39 per cent have directorial positions, compared to 6 per cent in non-worker-owned enterprises.

Meanwhile, women’s presence on financial cooperative boards can be as high as 65 per cent in a developing country like Tanzania.

These are only a few examples, as the report also documents the key contribution from cooperatives in other areas, including sustainable energy production, food security or health services.

Also, cooperative enterprises provide opportunities for specific groups such as informal workers by facilitating the transition to the formal economy. They can help others, such as migrant and domestic workers, move away from poverty and find decent work opportunities.

For example, in Ecuador, the Bella Rica Cooperative formalized artisanal and small-scale gold mine workers, many of them migrant workers, offering them a proper work contract and helping them obtain rights on the minerals mined.

Simel Esim is chief of the International Labour Organization’s Cooperative Branch. This article was adapted from a blog post published by the ILO in early September.